PQ - BOC and Terms Flashcards
What is the relationship between a term and a breach?
For a breach to occur, it must be established that a term of the contract was breached.
What are the type of terms that are not obvious?
1) Warranties
2) Implied terms
What are warranties?
A representation that becomes a term if D warrants sth to be true and failed to make sure that it is true.
E.g. In the facts, D warranted that (insert warranty), thus this warranty may amount to a term.
What are implied terms?
1) Terms implied in fact
2 tests
a) Business efficacy test (Moorcock) : The term ought to be implied must be necessary to give the transaction business efficacy.
b) Officious bystander test (Shirlaw): Had an officious bystander been present at the time of the contract formation and had suggested that such a term should be included, it must be obv both parties agreed to it.
c) Whole contract test: Terms can be implied if courts find parties have intended for it to be incorporated [Belize v Belize]
2) Terms implied by statute
implied term under
a) s14 of SOGA 1979 that the (item) is of satisfactory quality or is fit for purpose.
b) Goods sold by description correspond with their description (s13) or their sample (s15)
What are the issues when there is a breach?
1) whether the implied term was incorporated into the contract?
2) Is the exclusion clause unfair, and thus not binding?
How do you find out if a term is incorporated into the contract?
1) Signature
2) Notice
3) Course of dealing
What is the rule with regards to terms incorporated by signature?
1) Signature
- A person is bound by the contents of the document he/she signs regardless if they read it (L’Estrange v Gaucob)
Excptn: when there is a misrep of document (Curtis v Chemical Cleaning) - assistant told her that contract was for exclusion of liability for damage to beading but was for exclusion of liability for damage the whole garment.
What is the rule with regards to terms incorporated by notice?
1) Notice must be given before or at the time of contract formation (Olley v Marlborough)
Facts: Notice that Hotel would not be responsible for items lost or stolen given after the contract formed.
Thorton v Shoe land parking - exclusion clause not incorporated if notice is given after contract is formed.
2) D must have taken reasonable steps to bring the notice to C’s attention
- Red Hand Rule: More onerous the clause, the more it must be brought to notice (J Spurling v Bradshaw)
How is a term incorporated in the previous course of dealing?
- The course of dealing must be both regular and consistent (McCutcheon v David MacBrayne)
Regular:
Henry Kendall - 100 similar contracts over 3 years constituted course of dealing
Hollier - three or four contracts over 5 years held not to be a course of dealing
British Crane Hire Corp - Both parties were of equal bargaining power and were both in the trade and such conditions were habitually incorporated into these contracts
Consistent:
McCutcheon - previous transactions had been in writing and in the present case was oral.
If the term is incorporated, how will the court interpret its meaning?
- Courts will determine the meaning by ascertaining the objective contextual meaning of the term [Investor Compensation Scheme]
(i) Ascertainment of meaning the document would convey to a reasonable person having all the background knowledge reasonably available to the parties in the situation
(ii) The background … [is] the ‘matrix of fact’
(iii) Law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent
(iv) The meaning a document conveys is not the same thing as the meaning of its words
(v) If one would conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had.
What terms are covered under CRA 2015?
Any contract terms except ‘core terms’ if prominent and transparent s64.
s64(3): Meaning of transparent: plain and intelligible language
s64 (4): Meaning of prominent: brought to the consumer’s attention such that an average consumer would be aware
What is the test for unfairness for CRA 2015?
- Unfairness test = S62 + S63 + Schd 2
- Automatically unfair = S65
What terms are covered under UCTA 1977?
- Exclusion/ limitation clauses
- Clauses excluding liability for
1) Negligence S2
2) Breach of Contract S3
3) Statutory Implied Terms ss 6, 7
What is the test for unfairness for UCTA 1977?
- Automatically invalid
negligence - death/injury s2(1)
SOGA s6(1) - Reasonableness test s11 [guidelines: Schd 2]
Negligence; property damage s2(2)
BOC s3
Ss 13,14,15 SOGA s6(1A)
How do you find out the difference between a term and a representation?
1) verification
- a statement is unlikely to be a term of the contract if the maker of the statement asks the other to verify its truth
[Ecay v Godfrey] - a seller of a boat stated that the boat was sound but advised the buyer to have it surveyed. held that it is a representation
2) Importance
- term will be a necessary element of why the person whom the contract was made to entered into the contract.
[Couchman v Hill] - claimant wanted the heifer in calf but heifer suffered miscarriage and died. held that there was a breach of contract.
- Special knowledge
- if statement maker has special knowledge then it is a term
[Oscar Chess] - sold car for 290. Age of the car was wrongly described. Actual model was cheaper. Held that it was a representation, not a term. car dealers did not have special knowledge.
